Namoi Cotton CEO, Jeremy Callachor, resigns

Namoi Cotton has begun searching for a new chief executive officer after announcing the surprise departure of Jeremy Callachor at the end of this week.

With drought threatening to slash Namoi’s operating cash flows into negative territory during 2019-20, chief financial officer, Stuart Greenwood, has been charged with the CEO’s job in an acting capacity until a replacement is appointed.

Mr Callahor, also a past CFO, has worked for Namoi for a total of 26 years, in two stints.

The time is right for a new CEO to take the reigns at Namoi Cotton in the next phase of its development - Jeremy Callachor, Namoi Cotton

He took on the CEO’s job in late 2010 after the death of Bob Bell.

He subsequently led the 56-year-old former grower co-operative through a disciplined financial rebound from a $67m loss and debt blowout early in his tenure, then bedded down a joint venture ginning and marketing move with Louis Dreyfus in 2013, and took the business along a capital restructure path to a full listing on the Australian Securities Exchange in late 2017.

“The time is right for a new CEO to take the reigns at Namoi Cotton in the next phase of its operations and development, and for me to focus on the next stage of my career,” Mr Callachor said.

He will get a retirement payout equivalent to 38 weeks’ salary.

He said it had been a privilege to be involved with Namoi over long period.

Mr Callachor is also a director of peak industry body Cotton Australia.

He described Namoi Cotton as an iconic Australian agribusiness which had grown with the cotton industry since its inception in 1962, enjoying the highs associated with the boom in cotton production and surviving many challenges associated with exporting into global markets.

“I have felt enormously proud to be involved with this evolution, including leading a turnaround of the business in 2011-12 and the 2017 restructure,” he said.

Transforming role

Chairman, Tim Watson, thanked the retiring CEO for his “many achievements”, in particular noting how he had stabilised the business in 2011-12 and led its transformation from a grower co-operative to fully listed entity.

“The board thanks Jeremy for his significant contribution and services over a long period.”

As drought continues to wither current cotton crop yield prospects, Namoi Cotton has tipped a full trading year net profit after tax of between $3.5m and $5m for the year to February 28.

Expectations are down on a previous forecast of up to $7m largely due to the drought’s savage impact last season on the Queensland and northern NSW chickpea crop and global market volatility and costs associated with delayed export demand for cotton.

The company said full year earnings would also reflect problems for its 15pc stake in the Cargill Oilseeds Australia partnership which is subject to a commercial dispute.

Cash flow slows

Last week Namoi tipped operating net cash flows would be at the upper end of its previously advised $18m to $21m range.

But the current operating plan for the 2019 cotton season was targeting net cash flows from operating activities ranging from just $2.5m to a loss.

It warned the “extraordinary impacts of the ongoing drought” would play out across the company’s operations in 2019-20.

Its gins were likely to handle less than 500,000 bales this season as the national crop shrank from last year’s 4.52m bales to about 2.25m bales.

Picking has just begun on the earliest of this year’s cotton crop in Central Queensland, but extreme heat in January had lowered yield expectations across the industry.

Mr Callachor said the company was reviewing its operations to mitigate the impact of the exceptionally dry weather conditions.

It has also just renewed its finance facilities with Commonwealth Bank of Australia, including a $42m term debt facility to expire in April 2021, and up to $10m for working capital for the next year.

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